Canadian Manufacturer Penalized Bringing Production from China to Canada

18 Mar, 2024

Canadian Manufacturer Penalized Bringing Production from China to Canada

Every part of this couch was made in Canada except the slipcovers. Initially, when all components were sourced from China, no tariffs were applied by the Canada Border Services Agency (CBSA). However, upon transitioning production to Canada, the CBSA reclassified a single component, resulting in substantial tariff obligations. Barumba Play, a Canadian company specializing in children's toy couches, faces unexpected import tariffs after relocating production domestically.

The company, founded by Sara Feldstein in Markham, Ont., initially manufactured its couches entirely in China. As children's toys, the couches were tariff-exempt upon importation to Canada. Trouble arose when Feldstein moved production to Canada, retaining only slipcover manufacturing in China. Unexpectedly, the CBSA reclassified slipcovers as textiles subject to an 18% duty on imports, contrary to prior expectations.

Feldstein's business now faces retroactive tariffs exceeding $47,000, with potential costs escalating to $70,000 during the lengthy appeals process. Despite consulting experts before transitioning manufacturing, Feldstein was blindsided by the reclassification. She contends that slipcovers should be considered integral to the toy couches, exempting them from significant tariffs. However, the CBSA's stance remains unchanged, leaving Barumba Play in a challenging financial predicament.